Fiscal Reality Bites

Like many, New York Times columnist Paul Krugman remains oblivious to the debt disaster that looms for the American economy. For the rest of us, when Mark Steyn tells America to lower spending, we take heed. When two ratings agencies tell Washington to shrink the deficit, we get worried. And when Mark Zandi -- who claims the stimulus "did what it was intended to do" -- says we have a "grave need" to deal with our long-term deficit and debt issues, we're ready to hit the panic button.
Yet even as the total federal debt-to-GDP ratio passes 100%, Krugman is sticking to his guns. In his first column of 2012, Krugman claims those who believe the debt is the biggest issue facing the country are dishonest, and in fact says more spending is key to a strong economic recovery. As a 2010 paper in American Economic Review showed, however, debt above 90% of GDP can impact economic growth as much as 1.7 percentage points per year. James Agresti of Just Facts highlighted this...(Read Full Article)